Huge lottery win

[stigmata]

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the theory that less money is more important than more money

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That's the way I see it. Most people aren't going to miss $1, but they will damn well notice $1000000. So what if if the EV is -$0.5, it's the only shot you ever have of a $mill.

[Zetack]

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the theory that less money is more important than more money

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That's the way I see it. Most people aren't going to miss $1, but they will damn well notice $1000000. So what if if the EV is -$0.5, it's the only shot you ever have of a $mill.

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Most of the time the EV is much more negative on a dollar ticket than -.5. The lottery prize pool has to be truly massive. Also keep in mind that you're using post tax dollars and the prize is listed in pre-tax dollars.

The jackpot prize for the powerball, for example, is a bit worse that 146 million to one. To be technically correct you also have to figure in the odds of hitting one of the lessor prizes (who-hoo, love hitting that dollar payout).

But ballpark it somewhere around 104 or 110 million in the prize pool before your lottery ticket ev is as good as -$.50.

On the other hand, you're a poker player, so who gives a damn about a negative expected value under a buck a pop eh? Unless you're buying a hundred thousand lottery tickerts or something I supppose...

[MyTurn2Raise]

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actually, buying a lottery ticket is -EV

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not always....sometimes the accumulated prize pools get large enough

also, not every player is risk nuetral, so sometimes the potential big outcome outweighs a pure ev calculation

[danzasmack]

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from a utility standpoint buying a lotto ticket is incorrect. utility is the theory that less money is more important than more money, if im understanding the concept.

however, there is definitely psychological value in purchasing lotto tickets. many people work dead end jobs their entire life and dream of what it would be like to be a millionaire. they do not have any vehicles to become a millionaire so their dreams cannot be made a reality and they are soon left without a dream. as a result they turn to the lotto and are able to continue to dream of what it would be like to win the lottery and be able to buy a huge house and nice car, etc. having a dream is an important mindset for a human.

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I think the concept of utility would actually support your 2nd statement more. Utility, in simple terms, is how much something means to you or how much you enjoy it. Change in utility is diminishing per quantity (at a very high limit) so like utility increases less per each one and at some point your utility could start to go down. Most standard utility curves look like y = (x^.5). Good example of diminshing utility is number of beers. One beer is fun, 2 is good, then 8 is awesome but eventually you get sick and puke.

So therefore a lotto ticket would be more -EV for someone like Bill gates becaue winning that much money won't mean that much to him, his utility earned by getting +$1mil is a lot less than your average joe. However, the utility value of winning a lotto ticket is VERY high for someone very poor. So if you did P(Win)*(Utility) you would have to agree that it's better for the poor person.

Also, the "hope" factor is a good point.

My ex-gf's aunt won the lotto. It like ruined their life. People kept asking them for $ and the parents got in fights a lot. There was a big article about lotto winners and how it always screws them over.

[john kane]

danzas describes utility correcting. i assume he is majoring/majored in economics as well.

if all people are rational, then anyone who buys a ticket is making a +EU decision, and those who dont are also making a +EU decision. however, both are making a -EV decision in 99% of lotteries.

[MortalWombat]

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My friend won 565,000 pounds with a lottery ticket here in the uk i know lottery is bad to play but half a million! thats 1 million bucks talk about +EV lol

[/ QUOTE ]565,000 pounds of what? Whole pork loin? $1.77 per pound is what it's going for around here. I hope he has a big freezer.